MF Global Files for Bankruptcy

The filing is a humbling blow for the firm's chief executive, Jon S. Corzine, who joined the company after a decade as a United States senator and governor of New Jersey.

MICHAEL J. DE LA MERCED and BEN PROTESS

MF Global filed for bankruptcy protection for the United States parent company on Monday, the first American financial casualty of the European debt crisis.

In the Chapter 11 filing in Federal Bankruptcy Court in Manhattan, the firm's parent company listed assets of $100 million to $500 million and liabilities of more than $1 billion. JPMorgan Chase is identified as the biggest creditor, as the administrative agent for a $1.2 billion revolving credit facility. The bank itself only has about an $80 million exposure to the MF Global loan, having syndicated the rest, according to a person briefed on the matter.

Deutsche Bank is the second biggest, with a $325 million claim on behalf of bondholders.

As recently as Sunday night, MF Global was expected to sell some assets to Interactive Brokers Group, a Connecticut-based brokerage firm. But by Monday afternoon, the deal appeared almost certainly dead, according to people briefed on the matter.

An initial obstacle to the deal emerged over the weekend when the Commodity Futures Trading Commission, one of several federal regulators involved in the talks, raised questions about the capital levels at MF Global, these people said.

Interactive Brokers later raised similar concerns, leading them to call off the deal.

The acquisition would have been somewhat similar to what Lehman Brothers did in 2008, when its parent filed for bankruptcy but Barclays bought some of its assets.

Earlier on Monday, the Federal Reserve Bank of New York and a number of exchanges said they had suspended MF Global from conducting new business with them.

The bankruptcy filing is a humbling blow for the firm's chief executive, Jon S. Corzine, who took the reins of the firm in 2010 after a decade as a United States senator and governor of New Jersey.

The law firm of Skadden, Arps, Slate, Meagher & Flom is representing MF Global in the bankruptcy proceedings.

The descent into bankruptcy came after a week when investors fled MF Global and credit ratings agencies cut their ratings on the firm to junk status.

The agencies said they were concerned that MF Global lacked a sufficient capital cushion if its $6.3 billion in European debt went bad. The firm took a gamble in buying the troubled bonds of Italy, Portugal, Spain and Ireland last year, calculating that they would soon recover.